The New York State Legislature on April 20 passed the fiscal 2025 budget, which Gov. Kathy Hochul immediately signed. One provision of most interest to the affordable housing community will block discrimination by insurance carriers against affordable housing properties—a first-in-the-nation ban.

In recent years, rental housing providers nationwide have confronted increased insurance costs—but the impact on affordable housing providers has been particularly acute. Premiums and deductibles for policies required by mortgage lenders and governmental agencies have shot up two- to threefold over the past five or more years. This issue has been a focus of numerous affordable housing advocacy organizations in recent years.

This unanticipated increase in insurance costs has had a dramatic impact on many affordable housing communities. Affordable housing developments are typically underwritten at very narrow profit margins so large, unanticipated increases in expenses can easily threaten the stability of properties. This can lead to disinvestment and, ultimately, deterioration of these properties. Often governmental agencies are forced to step in with additional resources to keep properties viable.

The affordable housing community has been raising alarms over what they believe are discriminatory practices by insurance carriers for several years. In New York, the affordable housing community pushed for action by the state government. In 2021, a law was passed calling for a study of the issue by the New York State Department of Financial Services (DFS), the state agency that oversees the insurance industry. While the findings of that 2022 report were not definitive, it did point out that no state law prohibited insurance companies from asking policyholders about a property’s characteristics, including any affordability restrictions.

This change in law adopted in the fiscal 2025 state budget will seek to rectify that. The statutory language will prevent insurers from inquiring about, canceling or refusing to renew, or increasing the premium of a policy based upon:

· A property having a regulatory restriction that limits occupancy to specific income levels;

· A property or residents receiving rental assistance, including, but not limited to, Section 8;

· The level or source of income of a property’s residents; or

· Ownership of a property by a limited-equity cooperative, a public housing agency, or other affordable cooperative corporations.

The affordable housing community is hopeful that this change in state law will have a positive impact on affordable housing properties that have been unable to, or have struggled to, obtain required insurance coverage at a reasonable rate. As DFS oversees the insurance industry’s compliance with this statute, we anticipate that additional states will take notice and follow suit with similar rules. While it remains to be seen if New York’s new statute becomes a model across the country, property owners in the state should be encouraged by this development—and those outside of New York should stay tuned.